Vietnam - Despite big economic difficulties, retail market still grows rapidly

Though the national economy has experienced a very difficult year, the retail market in 2011 still grew well with the total revenue of 90 billion dollars, making up 15-16 percent of Vietnam's GDP.

The demand rescued the market

The Ministry of Industry and Trade has estimated that the total retail turnover in 2011 reached 1994 trillion dong, an increase of 29.3 percent over the previous year, an impressive growth rate in the context of the economic difficulties.

This has been explained by the fact that the market has been expanded over the last few years, while the demand of 87 million people has been increasing steadily.

The ministry has predicted that in 2012, the total revenue of goods and services retailing would increase by 20 percent, while the same growth rate would be maintained in the next five years.

The Vietnamese retail market has witnessed the strongest growth in the modern retail channel with the existence of 600 supermarkets, shopping malls, convenience stores.

Besides, Vietnam has a system of 9000 traditional markets that serve different classes of consumers.

According to the Vietnam Retailers' Association, most of the enterprises in the distribution sector have small scale with modest capital (55 percent of retailers have the capital of less than 100 million dong).

The existence of foreign retailers on the domestic market has helped change the face of the market. Though facing limitations in the development, in the last three years, since the day Vietnam officially began opening the retail market, the sales of every foreign retailer are still equal to the sales of many Vietnamese retailers.

The high growing rate explains why retailers have been rushing to expand their distribution networks recently. According to Saigon Tiep Thi, in the last month of 2011 alone, 20 new supermarkets were established, including the new faces from foreign countries.

Co-op Mart opened a new supermarket in Vinh Phuc province on December 31, raising the total number of Co-op Mart supermarkets to 55. Big C has opened its 16th supermarket in Vietnam. Vinatextmart now has 62 supermarkets nationwide, while Metro opened its 16th supermarket in Nha Trang City on December 14.

In 2012, Vietnam will restructure and distribution network However, in the report to deputy prime minister Hoang Trung Hai, leaders of the Ministry of Industry and Trade said that there are still a lot of things that need to be done to develop the Vietnamese distribution network.

Vietnamese goods have been penetrating some big supermarket chains such as Big C, Metro, Hapro and Saigon Co-op. However, Vietnamese goods still cannot penetrate the traditional distribution system. Especially, they are not available at big traditional markets, such as Dong Xuan

Market in Hanoi, Rong Market in Nam Dinh, Dong Ba in Hue City, Han Market in Da Nang, or Ben Thanh market in HCM City, from which goods are carried to different places nationwide

The main tasks for 2012 are aiming to a sustainable development and giving reasonable support to domestic retailers to help them stand firmly in the competition with foreign retailers on the domestic market.

Dr Pham Tat Thang, a senior researcher of the Trade Research Institute of the Ministry of Industry and Trade, said that in the last few years, while the spending and consumption habit of Vietnamese people have changed a lot, the organisation of goods production and trade has not changed accordingly, which explains why smuggled goods can exist on the home market.

The number of people who can earn money and make decision in spending is two times higher than the number of dependent people, while 70 percent of the income has been spent. 43 percent of the purchasing power come from rich people, but their mostly use imports.

Meanwhile, 70 percent of population in rural areas still cannot use Vietnamese products because of the low income. As a result, Vietnamese goods cannot reach out to high income earners, and remain affordable to low income earners.

VietNamNet

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